Opportunities to Improve the Expansion and Impact of Agricultural Lending in Mali

At the start of the study, Soro Yiriwaso did not offer financial services in any of the study villages. Out of the main 200 study villages, Soro Yiriwaso began operations in 90 randomly selected villages. In these villages, officers promoted the ‘Prêt de campagne’ product, a group agricultural loan offered to women who form an association specifically for the purpose of receiving and managing the money. The loans averaged around 32,235 Francs CFA (65 USD), and were offered at the start of the planting season, to be repaid with interest after harvest.

Grants Treatment: A randomly selected group of farmers from the villages that were not offered the ‘Prêt de campagne’ product, as well as those from the ‘loan’ treatment group who did not receive a loan were provided with a grant of 40,000 Francs CFA (80 USD). These grants were given to both men and women before the planting season, with no restrictions on how and when they could spend the money.

Savings Treatment: Another randomly selected group of farmers from the villages that were not offered the ‘Prêt de campagne’ product were offered a savings product designed jointly by Soro Yiriwaso and IPA. The savings product required women to decide on a target savings amount and deposit plan immediately after the harvest season, but they were only allowed to withdraw savings at the beginning of the next planting season. A small non-cash bonus was given to women to incentivize adherence to the savings plan.

Fertilizer Treatment: In order to evaluate the returns to fertilizers, and why small-holder farmers do not use more fertilizers on their plots, 23 separate villages were randomly selected to receive grants of different amounts of fertilizer. Women farmers who cultivated rice in these villages were assigned to receive one of three different quantities of fertilizer: no fertilizer, the officially recommended quantity, or half of this recommended quantity.

2010-07-01

2011-07-01

- Agricultural outcomes: Land cultivated, family labor, hired labor, fertilizer expenses, other chemicals expenses, total input expenses, value
output, and profits.

- Non‐agricultural outcomes: livestock ownership, owning a small business, consumption, financial savings, primary is
member of ROSCA, educational expenses, and medical expenses.

This study takes place in the region of Sikasso, within the areas of Bougouni and Yanfolila, in southern Mali. In these areas, farmers grow cash crops like cotton, maize, sorghum, millet, and groundnuts. Soro Yiriwaso, is a microfinance institution in Mali whose mission is to increase economic opportunities for poor Malians, especially women, by offering financial services. Soro Yiriwaso offers a loan product called Prêt de Campagne, or “countryside loan,” to women who join local community associations. Unlike most microloan products, it is designed specifically for farmers. The loans are disbursed at the beginning of the agricultural cycle between May and July and clients must repay loans on one lump sum immediately after the harvest. Soro Yiriwaso issues the loan to groups of women organized into village associations. Each individual woman then establishes a contract with the association for her loan.

A loop with a set of number of iterations randomly assigned villages to either loan or no‐loan, and then the PIs selected the random draw that minimized the t‐values for all pairwise othorgonality tests.

The randomization of the provision of grants was done at the household level, while the loan randomization was at the village level.

Yes

198 villages

8,361 households

Treatment villages: 88 villages
Control villages: 110 villages

The sample size was chosen based on extensive power calculations under the assumption that the minimum detectable effect size is .3 of a standard deviation for the agricultural loan. Based on other data available on Mali, we expected that to be a roughly 20% increase in per capita consumption. Under additional assumptions, we had an 85% probably that would detect this effect with a 5% significance level.

We partnered with a microlender in Mali to randomize credit offers at the village level. Then, in no-loan control villages, we gave cash grants to randomly selected households. These grants led to higher agricultural investments and profits, thus showing that liquidity constraints bind with respect to agricultural investment. In loan-villages, we gave grants to a random subset of farmers who (endogenously) did not borrow. These farmers have lower – in fact zero – marginal returns to the grants. Thus we find important heterogeneity in returns to investment and strong evidence that farmers with higher marginal returns to investment self-select into lending programs.

Beaman, Lori, Dean Karlan, Bram Thuysbaert, and Christopher Udry. “Self-Selection into Credit Markets: Evidence from Agriculture in Mali.” Working Paper, May 2015.

https://www.povertyactionlab.org/sites/default/files/publications/361%20Self%20Selection%20Mali%20May2015.pdf